Which of the Following Is Not Considered a Motive to Manage

question 5

Multiple Choice

Which of the following is not considered a motive to manage earnings?

• A) To create optimal manager compensation payments
• B) To create optimal job security for senior management
• C) To create optimal measures of assets and liabilities for balance sheet purposes
• D) To manage reported earnings in order to reduce industry-specific actions

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Definitions:

Derivative Instrument

A financial security whose value is derived from an underlying asset, index, or interest rate, often used for hedging or speculative purposes.

Futures Contract

A legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future.

Call Option

A financial contract giving the option buyer the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.

Historical Rate

An exchange rate used for converting transactions that have already occurred, based on the rate in effect at the time of the transaction.